Daily Digest

Daily Digest - December 21

Monday, December 21, 2009, 10:55 AM
  • Happy Holidays From The Banks
  • Winners And Losers In The Senate Health Bill
  • Heed The Great Stabilizer’s Words On Banking
  • Worst Decade On Record For US Investors
  • Extreme Modifications: 2% Mortgages
  • Time To Privatize The Postal Service?
  • Radio Giant Citadel Declares Bankruptcy
  • Gold Is The New Tupperware And You're Invited To The Party
  • The Wealthy As Crusaders For Justice
  • When Trucks Stop, America Stops
  • Seized North Korea Weapons Were Bound For Iran
  • Intelligence Documents Expose Iran's Nuclear Trigger
  • Diane Sawyer Asks Ahmadinejad About Reports Iran Has Nuclear Trigger
  • Pentagon Delays New 'Bunker Buster' Bomb
  • Will Israel Attack Iran?
  • Iran Can Shut Down Vital Oil Route: US Navy
  • OPEC Report: Oil Demand To Increase By 800,000 Barrels A Day In 2010
  • Shell Plans $5 Billion Sale In Nigeria
  • Oilfields At Stake In Nigerian Civil War

Economy

Happy Holidays From The Banks (M.W.)

Never mind President Obama's audacity of hope. It's the audacity of the banks that takes your breath away. Mean old Mr. Potter seems like Father Christmas by comparison.

Winners And Losers In The Senate Health Bill (M.W.)

The town of Libby, Montana isn't mentioned by name in the health care bill, but its citizens are big winners in the legislation, thanks to the influence of Finance Committee Chairman Max Baucus. It's just one example of how the legislation designed to remake the U.S. health care system also helps and hurts more narrow interests, often thanks to one lawmaker with influence or bargaining power. Here's a look at some other winners and losers in the latest version of the legislation.

Heed The Great Stabilizer’s Words On Banking (M.W.)

How does one give a wake-up call to the Masters of the Universe? Very little progress has been made in the reform of banking regulation, even after the worst banking panic in 80 years. Paul Volcker, who advises Barack Obama, wants a return to Glass-Steagall rules. He is right both for Wall Street and the City.

Worst Decade On Record For US Investors (M.W.)

Ten years ago, everybody was talking about which technology stocks to buy. Almost nobody was talking about gold. The Bank of England could barely give the stuff away at $260 an ounce. As I've poked fun at others' poor foresight, I had better fess up to my own, too. Ten years ago, a money manager friend repeatedly urged me to sell everything and buy gold. Did I listen? Don't ask.

Extreme Modifications: 2% Mortgages (M.W.)

At 8 a..m., homeowner Rodney Wynn was drowning under his $1,800-per-month, 13.4% interest rate mortgage. But by 5 p.m., he had found some relief: a 4.7% loan with a $970 monthly payment. Wynn is just one of a growing number of homeowners getting dream workouts on their mortgages. Some are even getting sweet 2% deals.

Time To Privatize The Postal Service? (M.W.)

There's been a lot of talk about a public option for health insurance. But what about the public option for mail? In its most recent fiscal year, which ended Sept. 30, the postal service lost $3.8 billion. That's after losing a total of $7.8 billion over the previous two years. Can this system be saved?

Radio Giant Citadel Declares Bankruptcy (M.W.)

Citadel Broadcasting Corp., the nation's third-largest radio broadcasting company, filed for Chapter 11 bankruptcy protection on Sunday in an effort to restructure its hefty debt load. Citadel owns and operates 224 radio stations and produces news and talk radio programing for 4,000 station affiliates and 8,500 program affiliates.

Gold Is The New Tupperware And You're Invited To The Party (M.W.)

The 1950s were big for Tupperware parties. The 1970s were hot for Mary Kay cosmetics. As this decade hobbles to a close, a new kind of social gathering is invading America's living rooms: the gold party.

The Wealthy As Crusaders For Justice (M.W.)

In “Only the Super-Rich Can Save Us!”, Ralph Nader imagines the Ross Perots reshaping the world to benefit the regular Joes. “This book is not a novel,” Mr. Nader proclaims. “ In the literary world, it might be described as ‘a practical utopia.’ I call it a fictional vision that could become a new reality.” Nader, who has been named by both Time and Life magazines as one of the 100 most influential Americans of the 20th century, has also made four runs for president as a third-party candidate.

When Trucks Stop, America Stops (M.W.)

The American Trucking Associations researched 7 key consumer industries to quantify the consequences of restricting truck traffic in response to an emergency.This report details the findings including this: Most water treatment facilities receive chlorine in enormous cylinders that are delivered by motor carriers. On average, trucks deliver purification chemicals to water supply plants every 7 to 14 days. Without these chemicals, water supply plants will run out of drinkable water in 14 to 28 days.

Seized North Korea Weapons Were Bound For Iran (M.W.)

A plane loaded with weapons from North Korea that was recently impounded in Bangkok was bound for Iran. The flight documents state that the cargo is "oil industry spare parts." Thai officials have said the actual cargo included shoulder-launched missiles, large rockets, parts for surface-to-air missiles and electronic systems to control weapons.

Intelligence Documents Expose Iran's Nuclear Trigger (M.W.)

Documents from Iran’s military nuclear project describe a plan to test a neutron initiator, the component of a nuclear bomb that triggers an explosion. Foreign intelligence agencies date them to early 2007. “Although Iran might claim that this work is for civil purposes, there is no civil application,” said David Albright, a physicist and president of the Institute for Science and International Security in Washington, which has analysed hundreds of pages of documents. “This is a very strong indicator of weapons work.”

Diane Sawyer Asks Ahmadinejad About Reports Iran Has Nuclear Trigger (M.W.)

Sawyer interviewed Iranian President Mahmoud Ahmadinejad in Copenhagen after he attended the UN conference on climate change.

Pentagon Delays New 'Bunker Buster' Bomb (M.W.)

A "bunker buster" bomb with more than 10 times the explosive power of its predecessor is to be put into service next December, the DoD told Reuters on Friday. The precision-guided, 30,000-pound Massive Ordnance Penetrator, or MOP, is designed to destroy potential targets such as deeply buried facilities that are beyond the reach of existing bombs. MOP testing is being carried out by the Air Force and the Defense Threat Reduction Agency, which is responsible for safeguarding the the US and its allies from weapons of mass destruction..

Will Israel Attack Iran? (M.W.)

(Video, Transcript) Chris Matthews interviews Michael Rubin, resident scholar with the American Enterprise Institute, and Bob Baer, a former CIA officer and intelligence columnist for Time magazine. Both agreed that Israel will attack Iran. "Israel can strike on its own, but they can‘t finish the job on their own. The worst possible scenario for us would be that Israel starts something, and then the region becomes so messy that we feel that we have to finish it."

Energy

Iran Can Shut Down Vital Oil Route: US Navy (M.W.)

As word spreads of an upcoming Israeli attack on Tehran, the US Office of Naval Intelligence confirms that Iran can easily seal off the Strait of Hormuz in the event of war. According to a September assessment, if the United States or Israel decide to bomb Tehran's nuclear sites, Iran's naval modernization and maritime capabilities have reached a point where it can shut down the Strait of Hormuz, through which nearly 40% of the world's oil supplies pass.

OPEC Report: Oil Demand To Increase By 800,000 Barrels A Day In 2010 (M.W.)

OPEC said in its December Monthly Oil Market Report this week that world oil demand is now expected to increase by 800,000 barrels a day to 85.13 million barrels a day, with the higher demand coming largely from developing countries and not major consuming countries in the developed world. Also, the IEA said in its monthly oil report released Friday, "Growth continues to be driven by non-OECD countries, notably in Asia and the Middle East."

Shell Plans $5 Billion Sale In Nigeria (M.W.)

Royal Dutch Shell, the oil giant, has launched a shake-up of its controversial operations in Nigeria by offering oilfields valued at up to $5 billion (£3.1 billion) for sale. The auction comes as Nigeria prepares to impose harsher terms on foreign operators next month and hand greater control to domestic firms.

Oilfields At Stake In Nigerian Civil War (M.W.)

After a brief respite from violence in the oil-rich Niger Delta region, the threat of new rebel attacks looms again, which could mean higher global oil prices in the New Year. Oil-rich nations from Russia to Venezuela to Iran have tightened their supplies of fuel. The U.S. already imports 16% of its oil from Africa. Nigeria holds by far the biggest reserves in Africa and supplies 8 to 10% of all U.S. oil imports.

13 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - December 21

"The dollar holdings in India’s foreign exchange reserves are probably around 50 per cent as the Reserve Bank of India has diversified reserves in favour of non-dollar currencies as the trend is globally."

"China's new loans surged to record levels in the first half of this year and, despite an easing in the second half, are likely to remain relatively high by historical standards next year at 7.5 trillion yuan, according to a Reuters poll of 20 analysts.

The massive lending, aimed at sustaining China's economic growth, would cut banks' capital adequacy ratios, a key measure of their ability to absorb losses."

"Lawmakers and the governor spent much of 2009 cobbling together a way to close a $60 billion budget deficit, with the full realization that whatever they did, it wouldn't be enough to fend off a new deluge of red ink in 2010.

Sure enough, the nonpartisan Legislative Analyst's Office estimated last month that the state now faces a $20.7 billion gap between what it can expect to collect in revenues and spend over the next 18 months.

That figure includes a $6.3 billion hole for the current fiscal year, which ends June 30, and a $14.4 billion deficit in the 2010-11 year, which begins July 1.

The California constitution requires the governor to produce a balanced budget proposal by Jan. 10, and Schwarzenegger plans to do it Jan. 8."

""I've been in state government now 15 years, and I am probably the most frustrated I've ever been in terms of how (state government) is working," said State Rep. Jay Hottinger, R-Newark. "There are just enormous financial problems we are about to face."

Hottinger said the deficit this year was about $851 million, but he anticipates that in 2011 the deficit could be between $5 billion and $9 billion. That is because the budget this year uses almost $6 billion of one-time federal funding, much of it from the stimulus package, in the operating budget. In addition, rainy day funds were eliminated."

"The state Transportation Trust Fund is projected to run dry by June 2011, leaving the new governor with two unsavory options: borrow more money or raise taxes and tolls. So far, he has said he is against both.

Christie, who argued against additional debt during his gubernatorial campaign, approved a decision by the Transportation Trust Fund Authority this month to borrow $1.2 billion, bringing the fund's debt to about $11.6 billion.

The new borrowing should provide enough money to pay for transportation projects for the six months after Christie takes office on Jan. 19.

That will leave about $1.6 billion before the fund is tapped out. After that, all of the $895 million that annually flows to the fund from tolls and fuel and sales taxes will be needed to pay the interest on previously borrowed money. No money will be available for new transportation projects."

""The banking crisis has moved into a second stage" as banks slowly write off bad loans on their books, said James Ferguson, chief international strategist at Pali Capital. Mr. Ferguson estimates total U.S. bank losses on loans of all kinds at $1.6 trillion, while other analysts say the losses could run as high as $3.8 trillion amid rising unemployment, defaults and foreclosures.

But banks so far have reported only a little more than $607 billion of those losses, suggesting that they have publicly acknowledged only the tip of the iceberg, Mr. Ferguson said.

"That would imply that the loss-recognition process, which took almost two decades to complete in Japan, is not yet much more than one-third of the way through," he said. "

"The market rally has been a healing experience for many investors. But companies with battered pension funds may be feeling ill for some time."

"As a result, the total pension deficit for calendar-year companies probably has narrowed only slightly in recent months, to $270 billion, from $298 billion at the start of the year, estimates Mr. Zion. By law, companies have to make contributions toward closing those deficits over a seven-year period. Barring a new bull market, investors should count on plenty of that cash coming out of companies' pockets."

"Meanwhile, some 275,000 retired NYC employees — including 69,775 teachers, 44,290 cops, 17,404 firefighters and 13,664 others — cost city taxpayers $6.7 billion this year, as officials dipped into the general revenue to make up pension-investment shortfalls. That’s up from only $703 million in 2000. By 2016, taxpayers will be on the hook for $12.3 billion.

New York City pensions, which increase each year whether the stock market rises or falls, threaten to hit the city “like a tsunami,” one expert said."

(Page 2)

"OUR $30B PENSION BILL

Pension losses from last year’s economic crash have hit New York taxpayers like a fiscal stealth bomb.

The city has to pay its employee retirement funds an extra $30 billion to cover last year’s huge investment losses, plus interest and higher benefit payments, The Post has learned.

The city’s five pension funds plunged in value from $101.9 billion to $79.5 billion in fiscal year 2009, according to city Comptroller Bill Thompson’s new Comprehensive Annual Financial Report.

The five funds — covering cops, firefighters, teachers, transit, sanitation and other workers — lost about $20 billion in stocks and other investments in disastrous FY 2009, which ended June. 30.

Since, by law, the city has to increase assets by 8% a year, that adds $8 billion to the shortfall, plus $2 billion from increased benefit payments"

"In a sort of “OK news/bad news” announcement, the state agency that oversees the teacher pension fund reported an impressive 9.18 percent return on investments from July through September.

But that came after a precipitous drop of 26.4 percent during the four previous quarters – a loss of nearly $20 billion from a fund that, two years ago, topped $67 billion."

(Chart from their story, showing the rising costs of their state teacher pensions)

 

"WASHINGTON (AP) -- Homeowners who get a substantial cut in their monthly mortgage payments still stand a good chance of falling behind again, a report by two federal regulators says.

Nearly 40 percent of homeowners who received a loan modification that reduced monthly loan payments by 20 percent or more were at least two months late again within a year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said Monday.

That's an ominous sign for the Obama administration's plan to stem the foreclosure crisis, which was launched in March. Only about 31,000 modifications have been made permanent under that plan."

"Russia's Finance Ministry has sold 30 metric tons of gold to the country's Central Bank for US$1 billion, an official said Monday, saying the cash will be use to help ease the crisis in the country's budget."

"Dec. 21 (Bloomberg) -- The difference between 2- and 10- year Treasury notes widened to a record as investors bet an accelerating economic recovery will fuel inflation and damp demand for government debt as the U.S. borrows record amounts."

"Dec. 21 (Bloomberg) -- Commercial property values in the U.S. declined in October to the lowest level since 2002 as unemployment reduced demand for apartments, offices and retail space.

The Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September, according to data compiled by Bloomberg. Prices fell 36 percent from a year ago and are 44 percent below the peak in October 2007.

Values are dropping as U.S. unemployment climbs and consumers cut spending. Office vacancies may approach 20 percent next year as employers hold off hiring, commercial property brokers Jones Lang LaSalle Inc. and Grubb & Ellis Co. said last month. "

"Companies rated B- or lower by Standard & Poor’s have issued $8.42 billion of bonds in December, more than in any full month this year, and compared with $6.91 billion in November, Bloomberg data show.

“This bulge in CCC and B- origination shows potential for heightened near-term defaults,” said William Chew, managing director of corporate and government ratings at New York-based S&P. “We went from white-knuckle fear to some level of investor amnesia in a short period of time.” "

"Serious delinquencies among U.S. prime mortgages rose nearly 20 percent in the third quarter from the prior quarter, as the percentage of current and performing mortgages fell for the sixth consecutive quarter, banking regulators said on Monday.

The report by the Office of Comptroller of the Currency and the Office of Thrift Supervision, which are part of the Treasury Department, covered about two-thirds of all U.S. mortgages.

It found 3.6 percent of prime mortgages -- those made to the most credit-worthy borrowers -- were seriously delinquent in the third quarter. That was more than double the year-ago quarter and up nearly 20 percent from the 2009 second quarter.

The report defined "serious delinquencies" as those loans 60 days or more past due and loans to delinquent bankrupt borrowers."

V's picture
V
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Re: Daily Digest - December 21 Winners and Losers

In the healthcare ? bill the winner is definitely big pharma.

Americans cannot buy drugs form Canada or Mexico despite a promise on the campaign trail 

from the big O. Oh Well the more thins change the more they stay the same.

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dcm
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Re: Daily Digest - December 21

"Americans cannot buy drugs form Canada or Mexico despite a promise"

funny, George said and did the same thing. Wish that was the only similarity

Tycer's picture
Tycer
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Re: Daily Digest - December 21

I had a feeling Citadel was a PE owned fiasco

dcm's picture
dcm
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Re: Daily Digest - December 21

The Health Care "Reform" Bill is a corporate pandering corrupt financial nightmare. Firedoglake is sponsoring a good petition:

http://action.firedoglake.com/page/s/killthisbill?source=web&subsource=side

Johnny Oxygen's picture
Johnny Oxygen
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Re: Daily Digest - December 21

Hey Tycer thanks for that link to the money masters the other day. That was really informative!

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Damnthematrix
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Re: Daily Digest - December 21

 

                                        NAVY'S NEW PIRATE CATCHER..  





NAVY'S NEW PIRATE CATCHER...


What a Ship, WOW!


A couple of these should be able to easily clean all the pirates out of the Indian Ocean .


U.S.S. Independence (LCS-2)


A Triple Hulled, Weapon-Laden Monster.


We've been hearing rumblings about the U.S. Navy's triple-hulled ships, but here's one that was launched last month, the U.S.S   Independence .. Built by General Dynamics, it's called a "littoral combat ship" (LCS), and the tri-maran can move huge weapons
around faster than any ship in the Navy. Ironic that with all that high tech built in, the ship reminds us of the Merrimac ironclad from Civil War days.

Littoral means close to shore, and that's where these fleet-hulled babies will operate, tailor-made for launching helicopters and armored vehicles, sweeping mines and firing all manner of torpedoes,
missiles and machine guns.

These ships were designed to be relatively inexpensive this one's a bargain at $208 million and the navy plans to build 55 of them.
This tri-maran is the first of the new fire-breathing breed, ready to scoot out of dry dock at a rumored 60 knots.. It's like a speedy and heavily-armed aircraft carrier for helicopters.


pinecarr's picture
pinecarr
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Posts: 2237
Re: Daily Digest - December 21

M.W. and SaxPlayer, awesome job bringing relevant news from a rich variety of sources to our attention!

M.W., I loved the article "When Trucks Stop, America Stops'.  What a find!  If anyone wants insight into what we might expect in the future if commercial trucking traffic is disrupted -for whatever reason (misquided emergency legislation, fuel shortages, or whatever)- this is a great reference.  The 7 key consumer industries the American Trucking Associations looks at include:

- The Food Industry

- Healthcare

- Transportation

- Waste Removal

- The Retail Sector

- Manufacturing

- Banking & Finance

and other Effects.

Great read; thanks!

- pinecarr

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matters
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Posts: 22
Re: Daily Digest - December 21

 

Hello pinecarr Smile Hi everyone!  I am the mysterious M.W. and I just wanted to thank you for the hat tip. You have no idea how much I appreciate your kind words.

I was a fairly new reader on CM, hadn't even joined yet, and one day I saw a post about Davos leaving and an email address for submitting articles.... I wanted to pitch in and help...maybe give back in some way in appreciation for everything Chris does---for free, no less, not to mention all his dedicated family members and numerous volunteers here. Anyway, to make a long post longer, lol, there were some days where there were no other articles submitted. So I became bent on trying to find not only a re-cap of the most important stories, but hopefully a good variety and a little something for everyone.

I can't hold a candle to Saxplayer or Davos or most of the regulars on here... there are SO many---JAG, and Damnthematrix are just a couple of regulars whose thoughts I always look forward to reading. JAG, you are a HOOT, lol. Bet you're a mush on the inside- that was such a great gift you gave to Chris !!! Sooooo talented. Hilarious.

And of course, many of the regulars send in some of the BEST "finds" out there- including YOU, pinecarr, so thank you for ALLLLLL the great stuff you send  (I follow the European newspapers too, like you.)  And many thanks to Claire H, SolidSwede, hucklejohn, joemanc, nncita, JRB, Ben Johnson....the list is endless...  thanks to everyone here !!!

Hope everyone's enjoying the holiday season. See y'all around. Melissa

 

pinecarr's picture
pinecarr
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Posts: 2237
Re: Daily Digest - December 21

You're welcomed, Melissa!  I wondered who "M.W." was!:)  Thanks for jumping right in and making such a great contribution to the site!

-pinecarr

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Online)
Joined: Jul 30 2009
Posts: 4066
Re: Daily Digest - December 21

Ah, the mystery is over!

Thank you Melissa for all of the great news stories you've been sending in for the Daily Digest.  I've been trying to figure out who that M.W. was and I had no idea it was someone new to this site.

matters's picture
matters
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Posts: 22
Re: Daily Digest - December 21
saxplayer00o1 wrote:

Ah, the mystery is over!

Thank you Melissa for all of the great news stories you've been sending in for the Daily Digest.  I've been trying to figure out who that M.W. was and I had no idea it was someone new to this site.

Hi saxplayer !!! Smile Yes, I'm a newbie, lol. You guys put me to shame. I nearly "quit' early on cause I could NOT keep up with a FRAGMENT of what you do. I emailed Jeanine cause my brain was so fried, hehehe... I told her that I would try and find artcles OTHER than what you and Davos and all the guys here are SOOOOOOO good at. You guys are the experts on numbers and facts and figures and investing and stocks and all that. I'm only trying to fill in the gaps, but you make it REALLY hard cause you find everything FIRST, lol.

Happy to be here. Thanks for the PHENOMENAL work you ALL do !!!

Warm regards, Melissa

kmaher's picture
kmaher
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Posts: 82
Re: Daily Digest - December 21

Thank you Swt Melissa and Saxplayer!  Great work and much appreciated.

                                            Kevin

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